In North Cypress Medical Center Operating Company, Limited v. Cigna Healthcare, No. 12-20695 (5th Cir. 2015), the Fifth Circuit Court of Appeals (the “Court”) faced the issue of whether a hospital, North Cypress, has standing to sue an insurer, CIGNA, under ERISA for benefits CIGNA has not paid under health plans which it insures. North Cypress is an out-of-network provider under the health plans at issue (the “Plans”). Bills to insured patients from North Cypress for hospital services have two parts: the part the patient pays and the insurer pays. North Cypress developed a practice, under which it would discount the amount due from the patient, but would not reduce the amount paid by the insurer. Upon learning about this practice, with respect to patients who participate in the Plans, CIGNA refused to pay the full amount of its part of the bills. North Cypress sued CIGNA under ERISA for the amounts it owes under the bills. The district court ruled that the hospital does not have standing to bring this ERISA claim, and the North Cypress appeals.
In analyzing the case, the Court said that healthcare providers, such as hospital, may not sue in their own right to collect benefits under an ERISA plan, but may bring ERISA suits standing in the shoes of their patients. In this case, the hospital had received express assignments of rights from at least some of its patients. Here, the insurer argues that there is no injury in fact to patients-a requisite for standing under the Constitution- because they were not billed for the amount allegedly due from the insurance plans. But the assignment, at the time made, is for all amounts due from the Plans. The patients have the right to have the benefits paid in full, and this right does not disappear because of the assignment, so that the insurer’s failure to pay causes injury. As such, the Court concluded that North Cypress has standing-under both the Constitution’s minimum requirements and ERISA’s statutory rules-to bring its claims under ERISA.